Moody's Raises Flagstar Bank Deposits to Baa3 and Prime-3 Investment Grade
Moody's upgraded Flagstar Bank's long-term deposit rating to Baa3 from Ba1, short-term deposit rating to Prime-3 from Not Prime and its long-term issuer rating to Ba3 from B1. The upgrade reflects improved financial performance, remediation of internal control weaknesses and a path to ROAA above 0.5% following Fitch's March action.
1. Moody's Rating Actions
Moody's upgraded Flagstar Bank's long-term deposit rating to Baa3 from Ba1, short-term deposit rating to Prime-3 from Not Prime and long-term issuer rating to Ba3 from B1, marking the second major rating upgrade following Fitch's action in March.
2. Drivers of Upgrade
The agency cited Flagstar's improved financial performance, successful remediation of a material weakness in internal controls over financial reporting, a path to achieving a consistent return on average assets above 0.5% without further outsized credit losses and a materially strengthened capital position.
3. Funding Profile Impact
Investment grade deposit ratings are expected to enhance Flagstar's funding profile by expanding access to corporate, institutional and municipal deposits, supporting continued growth and potentially lowering borrowing costs.
4. Company Profile
As of December 31, 2025, Flagstar held $87.5 billion in assets, $61.0 billion in loans, $66.0 billion in deposits and $8.1 billion in stockholders’ equity across approximately 340 branches in ten states.